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TICKERS: ATXI

Coverage Initiated on Biopharma with 'Opioid Sparing Solution for Post-Op Pain'
Research Report

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An H.C. Wainwright & Co. report highlighted the advantages, status and potential of this lead asset.

In a June 25 research note, analyst Ed Arce of H.C. Wainwright & Co. indicated the firm initiated coverage on Avenue Therapeutics Inc. (ATXI:NASDAQ) with a Buy rating and an $11 per share price target. The company's current stock price is $3.49 per share.

Avenue is advancing its lead drug, intravenous (IV) Tramadol for the treatment of moderate to moderately severe postoperative pain. The therapeutic, Arce purported, "provides, we believe, sufficient pain relief to fill the analgesic gap between IV acetaminophen/nonsteroidal anti-inflammatory drugs for mild to moderate pain and widely used conventional narcotics like generic Percocet and Vicodin for severe pain." Avenue has an exclusive license to IV Tramadol for the U.S. market.

Arce pointed out that IV Tramadol has a handful of advantages. For one, it has a well-known history of being efficacious and safe, as the drug is merely a different form of the oral tablets known as Ultram that came onto the market in 1995.

IV Tramadol has a two-pronged mechanism of action, working as a weak opioid agonist and as a serotonin-norepinephrine reuptake inhibitor. Accordingly, it has no direct competitor.

IV Tramadol would be differentiated by its Schedule IV categorization, under which Ambien and Valium fall for example, versus the Schedule II categorization of other opioids, such as oxycodone and fentanyl. This is because it has been shown that the potential for abuse of and dependence on IV Tramadol is "significantly lower" than that of other opioids, wrote Arce.

IV Tramadol could meet the urgent need for nonaddictive pain medication. More than 6% of U.S. patients prescribed Schedule II opioids for pain become addicted to them, noted two key opinion leaders Avenue recently hosted on a conference call. They also suggested IV Tramadol could complement other, less potent Schedule IV pain relievers, such as ibuprofen and ketorolac.

Recently, IV Tramadol achieved the primary endpoint and all three key secondary endpoints in a Phase 3 clinical trial, Arce reported. Patients who received the drug following surgical bunion removal experienced quick pain relief and tolerated the pain medicine well. The safety profile remained consistent with the established one.

The next step and an upcoming catalyst for Avenue and IV Tramadol, Arce relayed, is the start in Q3/18 of a second pivotal, Phase 3 trial of the drug in patients post abdominoplasty, or, commonly, tummy tuck surgery. With only about $10 million currently in cash, Avenue would likely need additional funding to complete its second Phase 3 trial. "We see significant upside once the financing overhang is removed," said Arce.

Topline data from this second Phase 3 trial are anticipated in Q2/19, after which Avenue would file a new drug application, potentially by the end of 2019. An FDA approval could come by the end of 2020, followed by a commercial launch in Q1/21. Due to U.S. physicians' familiarity with oral Tramadol, their uptake of the IV formulation should be rapid, just as it has been outside of the country.

Subsequently, sales of IV Tramadol could reach $24.1 million in 2021, $82.2 million in 2022, $156.8 million in 2023, $214.7 million in 2024 and a peak of $330.2 million in 2029. Arce qualified that by saying, "We note that our sales projections may prove to be conservative given our view that U.S. physicians today are much more focused on opioid sparing and multimodal therapy than they were just a few years ago."

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Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Disclosures from H.C. Wainwright & Co., Avenue Therapeutics Inc., Initiating Coverage, June 25, 2018

I, Ed Arce, certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.

None of the research analysts or the research analystís household has a financial interest in the securities of Avenue Therapeutics, Inc., Fortress Biotech, Inc. and Pacira Pharmaceuticals, Inc. (including, without limitation, any option, right, warrant, future, long or short position).

As of May 31, 2018 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Avenue Therapeutics, Inc., Fortress Biotech, Inc. and Pacira Pharmaceuticals, Inc.

Neither the research analyst nor the Firm has any material conflict of interest in of which the research analyst knows or has reason to know at the time of publication of this research report.

The Firm or its affiliates did receive compensation from Fortress Biotech, Inc. for investment banking services within twelve months before, and will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.

H.C. Wainwright & Co., LLC managed or co-managed a public offering of securities for Fortress Biotech, Inc. during the past 12 months.

The Firm does not make a market in Avenue Therapeutics, Inc., Fortress Biotech, Inc. and Pacira Pharmaceuticals, Inc. as of the date of this research report.




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